Lecture 12: Climate, Finance, Role of Central Banks

Question 1

direct finance

Answer 1

financial markets

Question 2

financial markets

Answer 2

money market and capital market

Question 3

indirect finance

Answer 3

financial intermediates

Question 4

financial intermediates

Answer 4

credit institutions, other monetary financial institutions

Question 5

borrowers / net spenders

Answer 5

households, firms, government and non-residents

Question 6

lender / net savers

Answer 6

households, firms, government and non-residents

Question 7

overall costs and risks of climate change

Answer 7

equivalent to losing at least 5% of global GDP each year

Question 8

why is climate relevant for monetary policy

Answer 8

1. reducing the risk of incurring losses
2. contributing to the EU climate policy
3. maintaining price stability

Question 9

role central banks

Answer 9

Central banks (supervisors) have a central role to play in giving the example and leading green finance

Question 10

concept of stranded assets

Answer 10

assets that turn out to be worth less than expected as a result of changes associated with the energy transition

Question 11

double materiality

Answer 11

it is about how climate change is going to impact you but also how you are impacting others

Question 12

main goal

Answer 12

the main goal is to match the real economy and the financial one

Question 13

main message

Answer 13

It is less costly to act now that to wait (and avoid financial instability in the long run)